Wednesday, June 7News That Matters

BA owner burns ‘£178m of cash a week’ as airline ramps up war of words with unions

British Airways (BA) has told staff its parent firm is burning through £178m of cash a week and the airline does not have “an absolute right to exist” as a row with unions intensifies.

In a letter to staff seen by Sky News, BA chief executive Alex Cruz rounds on the GMB and Unite unions, calling a campaign to take Heathrow landing slots away from BA “bizarre” and a threat to jobs.

He criticises the government for damaging the industry though the introduction of a 14-day quarantine period from Tuesday as the coronavirus pandemic eases.

In an interview with Sky News, the airline's chief executive Alex Cruz said the action was an "own goal" and part of a "cynical" action by the union.
Image: BA boss Alex Cruz: ‘The BA of tomorrow will be a smaller company’

The letter to staff, sent after the Home Secretary unveiled the plans yesterday afternoon, says “the government has dealt another blow to our industry with the introduction of a travel quarantine for those arriving into the UK”.

“Despite our best efforts the amount of flying we will be doing this summer will be limited and fiercely competed.”

Mr Cruz saves his strongest criticism for unions though – rounding on the GMB and Unite over a refusal to attend talks in the wake of the airline’s decision to cut 12,000 jobs.

UK travellers quarantine arrivals
Quarantine for travellers starts Monday

“I want to save as many jobs as possible. BA does not have an absolute right to exist. There are major competitors poised and ready to take our business.

More from Business

“So, it is really concerning to me that GMB and Unite refuse point blank to join any discussions about mitigating proposed redundancies and the impact of this dreadful virus.

“Bizarrely, the unions are now campaigning to have Heathrow slots taken away from British Airways. I don’t need to tell you that every slot lost will lead to jobs in BA being permanently lost.”

Unions for other BA staff have accepted the pay rise on offer
Image: Cabin crew are among those set to lose their jobs

Unions are furious over the planned job losses – around a quarter of BA’s workforce – imposed following the devastating impact of travel restrictions on the sector.

Unite general secretary Len McCluskey has called the move ‘”unlawful and immoral” following the company’s use of the government’s Job Retention Scheme.

He has called on the government to review British Airways’s Heathrow take-off and landing slots, which are highly prized and crucial to BA’s reliance on lucrative trans-Atlantic business travel.

BA says it is in talks with pilots union BALPA but Unite and the GMB, which represent cabin crew and other workers like engineers, have so far refused to engage.

EINDHOVEN, NETHERLANDS, APRIL 10: A Wizz Air plane arrives at Eindhoven Airport amid the coronavirus outbreak on April 10, 2020 in Eindhoven, Netherlands. Due to the current COVID-19 crisis there is a lot less Easter traffic than would be expected under normal circumstances. (Photo by Joris Verwijst/BSR Agency/Getty Images)
Quarantine ‘quite a costly exercise’ for UK economy

But the Unite union says it is the company’s plans to issue widespread redundancy notices and rehire staff on reduced terms that has driven its snub.

Mr McCluskey said “BA is using this health crisis as cover to impose a long-term plan to slash jobs, pay and conditions.

“No other employer has threatened to effectively ‘fire and rehire’ its workforce. There should be a government review of British Airways’s domination of UK landing slots amid the airline’s betrayal of its workers and the British public.”

Michael O'Leary
Michael O’Leary calls quarantine ‘bonkers’

The BA letter to staff defends the company from widespread criticism – including from MPs and unions – that BA should be using cash reserves built up from parent company IAG’s highly profitable recent years of operation before cutting jobs:

“Some people point to IAG’s cash reserves as the answer, suggesting we have enough cash to sit this out. The fact is, with almost no revenue coming into the business, IAG’s operating cash burn totals £178m every week,” it said.

“Others point to the support we have from the UK government’s Job Retention Scheme. It is very welcome but totals less than two days of cash burn per month as we continue to pay 80% of furloughed colleagues’ base pay without a cap.

“We are having to take on hundreds of millions of pounds in new debt, much of which must be repaid over a short term, so any revenues we make when we return to flying will be swallowed up by loan repayments.”

Mr Cruz ends the letter with a downbeat assessment of the future for the company and the sector, admitting that British Airways will be a smaller company for the foreseeable future.

He wrote: “Demand for flying in the coming years will be nothing like it has been.

“There will be fewer customers, flying to fewer destinations. That is the commercial reality. We anticipate the BA of tomorrow will be a smaller company, and one that needs to be even more efficient as it fights for every customer it carries against our competitors.

“Our company’s business is international flying and that is not returning quickly.”

Let’s block ads! (Why?)

Business News – Markets reports and financial news from Sky

Leave a Reply

Your email address will not be published. Required fields are marked *